Investment suggestion: continue to be optimistic about the steel sector in the medium term. Under the background of historically high profits and historically low valuations, the reduction of crude steel production combined with steady growth will usher in investment opportunities driven by fundamentals. Optimistic: 1) ordinary steel stocks with strong performance, high dividend and high elasticity; 2) Undervalued high-quality special steel stocks; 3) Ferrosilicon and pipeline in boom sub section.
Industry view: after the repeated superposition of the epidemic, overseas weakness led to the general decline of bulk commodities. Inventory removal is slow. The short-term high-frequency data is still weak. This week, the steel inventory has been removed again, but the intensity is general. The supply and demand pattern of the industry is still weak, the rise of steel prices is weak, the gross profit of the industry is still in a slow downward trend, and the performance of the steel sector in the second quarter is under pressure. The most promising products in the second quarter are Hunan Valin Steel Co.Ltd(000932) , Inner Mongolia Eerduosi Resources Co.Ltd(600295) , others such as Xinjiang Ba Yi Iron & Steel Co.Ltd(600581) , Xinyu Iron & Steel Co.Ltd(600782) , Fangda Special Steel Technology Co.Ltd(600507) , etc. In the context of weak cycle, investment opportunities are relatively optimistic about industrial chain processing stocks and new materials. In addition to traditional special steel categories such as Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) , Citic Pacific Special Steel Group Co.Ltd(000708) and so on, more attention should be paid to new energy related materials such as Henan Hengxing Science & Technology Co.Ltd(002132) , Zhangjiagang Guangda Special Material Co.Ltd(688186) and Xinxing Ductile Iron Pipes Co.Ltd(000778) , Zhejiang Kingland Pipeline And Technologies Co.Ltd(002443) and so on.
Market review: this week (from May 15 to May 20), Shenwan iron and steel increased month on month, leading the Shanghai Composite Index by 0.3%. The top gainers were Anyang Iron & Steel Inc(600569) (11.5%), Yongxing Special Materials Technology Co.Ltd(002756) (11.2%), Inner Mongolia Eerduosi Resources Co.Ltd(600295) (8.5%). The latest quotations of rebar, hot coil, iron ore and coke futures contracts this week were 4638 yuan / ton, 4715 yuan / ton, 818 yuan / ton and 3360 yuan / ton respectively, with changes of 0.6%, – 1.3%, – 0.4% and – 1.7% respectively compared with last week (may 8-may 13).
Industry trends:
Ordinary steel: the social inventory of steel this week was 15.25 million tons, a month on month decrease of 1.9%; Among them, the long timber inventory was 10.28 million tons, a month on month decrease of 2.7%; Plate inventory was 4.97 million tons, a month on month decrease of 0.2%. In early May, the average inventory of steel mills was 18.75 million tons, an increase of 3.6% month on month. This week, the shipment volume of 237 steel traders nationwide was 18.75 million tons, an increase of 3.6% month on month; This week, the cargo volume of terminal line snails in Shanghai was 2000 tons, an increase of 45.5% month on month. The cost lag gross profit of thread, hot rolling, cold rolling and medium and heavy sector tracked this week were 380 yuan / ton, 303 yuan / ton, 193 yuan / ton and 487 yuan / ton respectively.
Iron ore: this week, the shipment volume of iron ore from Australia, Pakistan and India was 23.67 million tons, a month on month decrease of 3.8%; The arrival volume of 6 ports in the North was 9.213 million tons, a month on month decrease of 5.7%. This week, the iron ore port inventory was 135.58 million tons, down 3.1% month on month. This week, the average daily dredging volume of Port imported mines was 3.307 million tons, an increase of 0.7% month on month.
Coking coal and coke: the coke market is weak this week, and the coke price continues to be reduced by 200 yuan / ton; The coking coal market is weakening, and the price is reduced by 100500 yuan.
Ferroalloy: China’s silicomanganese is in weak consolidation operation, and silicomanganese will maintain consolidation operation in the short term, and there is still pressure on price upward; The ferrosilicon market fluctuated in a narrow range this week, and the overall price tends to be stable. In the short term, the spot price of ferrosilicon is mainly stable.
Special steel: this week, the market price of die steel is stable and weak, and the market mentality is poor; The price of mainstream varieties of Youte steel fell slightly; The price of industrial wire rod decreased significantly.
Stainless steel: the overall demand for nickel was poor this week. At the beginning of the week, Shanghai nickel was weak at about 200000 yuan / ton; The chrome ore market operates smoothly and the price remains high. It is expected that the spot market price of chrome ore will still operate stably in the short term; The spot price of stainless steel showed a downward trend.
Risk tip: real estate fell, and the recovery of manufacturing industry was less than expected.
